Over my 22 years in the custom home building business I’ve run into the following scenario over and over again. In fact I’ve done it myself. It’s like walking to close to a Cholla cactus…if you’re smart…you only do it once. If you’re not you can extract painful needles time and time again. Some people never learn.
It’s that propensity people have to choose the cheapest solution or to choose the lowest bidder. There isn’t such a thing. In my experience the lowest bidder always costs more at the end of the day. You’re either constantly correcting the work, the job doesn’t get finished, and you have to hire another to complete it, or you get into a legal entanglement. There’s one that nobody wins…except legal counsel. So if you want to guarantee that you pay more….hire the one that costs least.
I’m going out on an appointment this morning to help someone who didn’t choose McCreary Homes about 10 or 15 years ago because of price, but now has a problem with their home that the original contractor won’t show up to correct. This is even after a corrective work order from Arizona’s Registrar of Contractors was issued and ignored. I don’t how some guys continue to be in business. Interestingly enough the people I’m going to help out have become friends over the years through some other mutual friends. When we first met they felt a little bad for selecting the other guy, but that was fine, I know how compelling the low number can be when you’re building a custom home and trying to squeeze everything you can out of what little income you have. The custom home design phase is euphoric. You want to select all the things you’ve seen in magazines, at a friends home, or at your local “Street of Dreams”. This allure is powerful.
Two other quick examples and then I’ll end with a quote from John Ruskin. The first prospective customer chose another builder because they said they could build the home in 12 months instead of my estimated 14. The home was structurally complicated. The bids were very close for a 1.5 million dollar home….it came down to the promised time frame. The building site was very tight and a prior home had to be demolished before construction could begin. The other contractor had mostly commercial experience and I don’t think realized access would be such a limiting factor. At the end of the day…the project went on for about 2-1/2 years and…get this…the contractor is suing the owner for the extra time it took. That blows my mind. The second prospective customer chose a design / build architect who does a great job at design, but doesn’t have as good a handle on the building side. I respect and admire good design and good architects. In fact I think design is everything and you have to have natural ability (like a musician) to do it well. Building, or putting the pieces together comes naturally to me. It’s good to have an architect that knows a little about building….and to have a builder who knows a little about good architecture and design. The combination produces beautiful projects. Back to the second prospective customer…the design/build guy went bankrupt. When I looked at this cost breakdown I could see why. There’s no way you can build this particular home for as little as he had in his cost breakdown. The owners called me wondering if I remembered them. I did. After the tale of woe and visiting at the half finished home, I gave them a proposal to finish the home. They went with a cheaper guy again. I haven’t kept close track but do recall driving by that area several months ago and noting that the home wasn’t done yet. I’ll have to check it out now that this blog has been created.
I’ll end with a quote by John Ruskin 1819 – 1900 entitled…
“The Lowest Bidder”
“It is unwise to pay too much, but it is worse to pay too little. When you pay too much you loose a little money…that is all. When you pay to little, you sometimes loose everything, for what you bought is incapable of doing what it was bought to do.
The common law of business balance prohibits paying a little and getting a lot…it can’t be done. If you deal with the lowest bidder it is well to add something for the risk you run. And…if you do that, you will have enough to pay for the something better.
There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.”
Best regards
LJ McCreary





















